Experts warn Bangladesh economy stuck, urge fair polls

The prevailing consensus across the business and policy landscape is that the economy is currently ‘breathing, but unable to walk’ as it is paralysed by political uncertainty ahead of the general election expected next February.

Business owners and entrepreneurs unanimously assert that new initiatives and investments are impossible without political stability and certainty.

Professor Rashed Al Mahmud Titumir of Dhaka University, Liaquat Ali Bhuiyan, Senior Vice-President of the Real Estate and Housing Association of Bangladesh (REHAB), Inamul Haq Khan, Senior Vice-President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Anwar-ul-Alam Chowdhury (Parvez), President of the Bangladesh Chamber of Industries (BCI), and former Chief Economist of Bangladesh Bank Dr Mustofa K Mujeri talked to the UNB correspondent about the current economic situation in Bangladesh.

The economy is sustained by political trust, and it is the government’s responsibility to restore that confidence, said economists, underscoring that without a stable political environment, the recovery process cannot begin.

This sentiment is echoed by the country’s development partners. The International Monetary Fund (IMF) has reportedly linked the disbursement of the next tranche of its $4.7 billion loan to the formation of an elected government. Similarly, both domestic and foreign investors are reluctant to take risks, preferring instead to adopt a cautious ‘wait-and-see’ stance.
Worrying Economic Indicators

Private Sector Credit Growth: Loan growth to the private sector has dropped to around 6.5 per cent — roughly half the normal rate — signalling a sharp contraction in new business activity and entrepreneurship.

Capital Machinery Imports: Imports of capital machinery, a key indicator of future industrial output, have declined by 25 per cent, casting a shadow over upcoming production and employment prospects.

Inflation and Savings: Inflation has been persistently high, hitting 8.36 per cent in September 2025, hitting hard the purchasing power of ordinary citizens, with the sales of national savings certificates falling by over Tk 6,000 crore, making it clear that many are being forced to liquidate their savings.

Foreign Investment: Foreign Direct Investment (FDI) fell by 22 per cent in the first quarter of the current fiscal year, as international investors remain cautious — with some existing firms even scaling back their operations.

“Investment is now not just an economic question, but a question of social confidence,” one analyst observed, noting that political instability and deteriorating law and order are heavily discouraging entrepreneurs.
Social Costs and Unemployment

The economic stagnation is inflicting a deep social toll, with experts warning of rising poverty and worsening unemployment.

Professor Titumir cautioned that high inflation has “reduced the purchasing power of the common people, increased poverty, and may push another 30 lakh people below the extreme poverty line.”

The country now faces a mounting unemployment crisis, with around 13 lakh jobless youths — including one in every three university graduates.
Industry Leaders Demand Clarity

Business leaders across key sectors have emphasised the urgent need to restore political and policy clarity.

Liaquat Ali Bhuiyan said that new investment in manufacturing, real estate, banking, and services has “nearly stopped.”

Inamul Haq Khan noted that foreign buyers and partners, including the IMF, have little confidence in a temporary setup.

“IMF and foreign stakeholders are waiting for the new government. Only then will confidence and investment surge,” he added.
Path to Recovery

Economists argue that the top priority for the current interim administration must be to hold a swift, credible, and widely accepted national election, paving the way for an elected government to take charge.

Anwar-ul-Alam Chowdhury (Parvez) told UNB that clarity on the election timeline and assurance of a peaceful process are the most crucial prerequisites for restoring economic stability.

Dr Mustofa K Mujeri observed that the economic environment will remain fragile as long as high interest rates persist and political uncertainty continues to limit capital flow.

Ultimately, analysts suggest that the nation stands at a “historic juncture,” where it must either accept the current stagnation or move decisively towards a new economic model anchored in political stability and trust, reports UNB.